[Tinned_Tuna]

This is quite bogus.

Competition is a very real, and very lucrative phenomenon.

A famous & classic counter-example of how being more competitive than your peers wins out is Toyota.

Toyota won out in the 80s and 90s because their cars were priced more competitively, and were of a higher quality. They didn't make fundamentally different products, they just did it better.

One company practically euthanised both the US and the UK's car manufacturing industry, by producing the same product better.

Similarly, Google did web search, just like Ask Jeeves, AltaVista, Yahoo! They became dominant by doing it better -- by offering better results, faster, and therefore out-competing their peers.

For yet another example, take Apple's return to fame. They did it by taking the portable music player, something ostensibly already done by Sony and Creative, and making it significantly better than their competitors. They also sold an image to go with it, but competing on terms of marketing could be considered a valid competition strategy.

Consider Tesla; although the story isn't played out yet, Tesla is looking strong. Not because they provide electric cars (though that helps), but because the cars they provide are more economical, comfortable, safe, and so on.

Ironically, one of Theil's own businesses is a counter-example to his own claim: PayPal. We could already get money from one person to another, or from ourselves to merchants. PayPal just did it better, and therefore out-competed the banks for consumer and SME money transfers.

Time and again, businesses win, not by being the first in the field; but by looking at an existing field critically, and considering how to improve it. They then enter the field and out-compete the incumbents, beating them at their own game.

[TeMPOraL]

I think the point of this piece is, very good business out-compete the incumbents and then go so far ahead that they become de-facto monopoly thanks to quality. As correctly pointed out in the article, Google did that to search. I'd also say they did that to webmail - as much as GMail has its UX problems, it's still miles ahead of everyone else wrt. UI and spam filtering. And Tesla, since you mentioned it, entered the market with one of the best cars available, electric or not, and it barely has any competitors in the electric market.

So it's not about being first, it's about being so good that you become a de-facto monopoly.

[TheOtherHobbes]

If you're arguing from the example of successful companies, the argument is circular. It ignores the technology companies that didn't become monopolies even though they shipped better products.

It also ignores the companies that became monopolies with inferior technology - not least, IBM with the original PC, which was a dated and inefficient design even when it was introduced, but succeeded because of marketing and a ready-made sales force.

Likewise, arguably, for MS DOS and Windows. Windows 3.1 was about seven years behind the leading edge of personal computing when it shipped.

Home users had been buying computers with full multitasking and (relatively, for the time) excellent graphics and sound from around 1988. Win 3.1 was a big step back from that.

It succeeded because it was a PC product, and it could be sold to millions of technically uneducated PC buyers.

Mediocre product in absolute terms. But a huge market surface.

Even Google search could be improved. It's good enough, but it's not the last word in what's possible in search. (I don't remember it being a whole lot better than AltaVista. It wasn't worse either, so there was no big reason to swap back.)

You don't make a monopoly with bleeding edge tech. You make it by finding or carving a niche with a huge potential customer base, and having significantly more effective marketing.

The product itself can be mediocre. It's perception that matters.

Which is why I don't think Tesla will ever be a monopoly. The niche is too small - much smaller than the rest of the car market - and the big players have marketing experience and a dealer network that Tesla doesn't.

And Google will carry on dominating search until 'search' becomes a legacy product and leaves an opening for a smart startup.

[izacus]

Also by preventing any competition from forming, locking in your users and preventing them from leaving by taking their data hostage in proprietary services and formats, buying any possible competitors and doing price dumping from other services to make competition entering the field economically unviable.

As seen done by Amazon, Google, Apple and other large companies. Competition is awesome, but unfortunately someone "winning" the race can quickly lead to them controling enough of the market to prevent good competition from forming.

[WalterBright]

Look back in history a few years. Everything you said was said with utter conviction about IBM in the 1980's, for example.

[agumonkey]

Didn't they just gave free access to some email system they bought ? They didn't invent anything, except for giving away a full mail service, while other free alternatives at the time only gave you half finished UIs, slow roundtrip times and very limited space.

Same for maps, free access to very satisfying service, not inventend at Google. Personally that's what made me love Google, they turned my computer into something more than office/game/medias, for "free".